Western Digital (WDC)

 

Although the majority of the Company’s transactions are in U.S. dollars, some transactions are based in various foreign currencies. The Company purchases short-term, forward exchange contracts to hedge the impact of foreign currency fluctuations on certain underlying assets, liabilities and commitments for operating expenses and product costs denominated in foreign currencies. The contracts have maturity dates that do not exceed 12 months. The Company does not purchase short-term forward exchange contracts for trading purposes.

 

The Company applies the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), as amended, which establishes accounting and reporting standards for derivative instruments embedded in other contracts and for hedging activities. The Company had outstanding forward exchange contracts with commercial banks for Thai Baht, Malaysian Ringgit, British Pound Sterling and Euro with values of $1.3 billion and $493 million at June 27, 2008 and June 29, 2007, respectively. Malaysian Ringgit contracts are designated as cash flow hedges. Euro and British Pound Sterling contracts are designated as fair value hedges. Thai Baht contracts include both cash flow and fair value hedges.

 

If the derivative is designated as a cash flow hedge, the effective portion of the change in fair value of the derivative is initially deferred in other comprehensive income (loss), net of tax. These amounts are subsequently recognized into earnings when the underlying cash flow being hedged is recognized into earnings. Recognized gains and losses on foreign currency contracts entered into for manufacturing related activities are reported in cost of revenues. Hedge effectiveness is measured by comparing the hedging instrument’s cumulative change in fair value from inception to maturity to the underlying exposure’s terminal value. The Company has determined that all of its cash flow hedging instruments for all years presented were effective as defined under SFAS 133.

 

Fair value hedges are not designated as hedging instruments, and therefore, the change in the instrument’s fair value is recognized currently in earnings and is reported as a component of non-operating income. Changes in fair value on these contracts were not material to the consolidated financial statements for all years presented.

 

 

Although the majority of the Company’s transactions are in
U.S. dollars, some transactions are based in various
foreign currencies. The Company purchases short-term, forward
exchange contracts to hedge the impact of foreign currency
fluctuations on certain underlying assets, liabilities and
commitments for operating expenses and product costs denominated
in foreign currencies. The contracts have maturity dates that do
not exceed 12 months. The Company does not purchase
short-term forward exchange contracts for trading purposes.

 

The Company applies the provisions of SFAS No. 133,
“Accounting for Derivative Instruments and Hedging
Activities” (“SFAS 133”), as amended, which
establishes accounting and reporting standards for derivative
instruments embedded in other contracts and for hedging
activities. The Company had outstanding forward exchange
contracts with commercial banks for Thai Baht, Malaysian
Ringgit, British Pound Sterling and Euro with values of
$1.3 billion and $493 million at June 27, 2008
and June 29, 2007, respectively. Malaysian Ringgit
contracts are designated as cash flow hedges. Euro and British
Pound Sterling contracts are designated as fair value hedges.
Thai Baht contracts include both cash flow and fair value hedges.

 

If the derivative is designated as a cash flow hedge, the
effective portion of the change in fair value of the derivative
is initially deferred in other comprehensive income (loss), net
of tax. These amounts are subsequently recognized into earnings
when the underlying cash flow being hedged is recognized into
earnings. Recognized gains and losses on foreign currency
contracts entered into for manufacturing related activities are
reported in cost of revenues. Hedge effectiveness is measured by
comparing the hedging instrument’s cumulative change in
fair value from inception to maturity to the underlying
exposure’s terminal value. The Company has determined that
all of its cash flow hedging instruments for all years presented
were effective as defined under SFAS 133.

 

Fair value hedges are not designated as hedging instruments, and
therefore, the change in the instrument’s fair value is
recognized currently in earnings and is reported as a component
of non-operating income. Changes in fair value on these
contracts were not material to the consolidated financial
statements for all years presented.

 

 

Although the majority of the Company’s transactions are in U.S. Dollars, some transactions are based in various foreign currencies. The Company purchases short-term, forward exchange contracts to hedge the impact of foreign currency fluctuations on certain underlying assets, liabilities and commitments for operating expenses and product costs denominated in foreign currencies. The contracts have maturity dates that do not exceed six months. The Company does not purchase short-term forward exchange contracts for trading purposes.

 

The Company applies the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended, which establishes accounting and reporting standards for derivative instruments embedded in other contracts and for hedging activities. The Company had outstanding forward exchange contracts with commercial banks for Thai Baht, Malaysian Ringgit, British Pound Sterling and Euro with values of $493 million and $264 million at June 29, 2007 and June 30, 2006, respectively. Thai Baht and Malaysian Ringgit contracts are designated as cash flow hedges under SFAS No. 133. If the derivative is designated as a cash flow hedge, the effective portion of the change in fair value of the derivative is initially deferred in other comprehensive income (loss), net of tax. These amounts are subsequently recognized into earnings when the underlying cash flow being hedged is recognized into earnings. Recognized gains and losses on foreign currency contracts entered into for factory related activities are reported in cost of revenues. Hedge effectiveness is measured by comparing the hedging instrument’s cumulative change in fair value from inception to maturity to the underlying exposure’s terminal value. The Company has determined that all of its hedging instruments for all years presented were effective as defined under SFAS No. 133.

 

All other contracts are related to international sales activities and are designated as fair value hedges. These contracts are not designated as hedging instruments under U.S. GAAP, and therefore, the change in the instrument’s fair value is recognized currently in earnings and is reported as a component of non-operating income. Changes in fair value on these contracts were not material to the consolidated financial statements for all years presented.

 

 

Although the majority of the Company’s transactions are in U.S. Dollars, some transactions are based in various foreign currencies. The Company purchases short-term, forward exchange contracts to hedge the impact of foreign currency fluctuations on certain underlying assets, liabilities and commitments for operating expenses and product costs denominated in foreign currencies. The contracts have maturity dates that do not exceed six months. The Company does not purchase short-term forward exchange contracts for trading purposes.

 

The Company applies the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended, which establishes accounting and reporting standards for derivative instruments embedded in other contracts and for hedging activities. The Company had outstanding forward exchange contracts with commercial banks for the Thai Baht, British Pound Sterling and Euro with values of $263.8 million and $151.4 million at June 30, 2006 and July 1, 2005, respectively. Thai Baht contracts are designated as cash flow hedges under SFAS No. 133. If the derivative is designated as a cash flow hedge, the effective portion of the change in fair value of the derivative is initially deferred in other comprehensive income (loss), net of tax. These amounts are subsequently recognized into earnings when the underlying cash flow being hedged is recognized into earnings. Hedge effectiveness is measured by comparing the hedging instrument’s cumulative change in fair value from inception to maturity to the underlying exposure’s terminal value. The Company has determined that all of its hedging instruments for all years presented were fully effective as defined under SFAS No. 133.